Money managers slashed net length in NYMEX crude for the seventh straight
week, US Commodity Futures Trading Commission data showed Friday.

The group’s net length fell 14,811 contracts to 286,176 contracts the
week that ended June 5, the lowest it has been since late October.

At that time, NYMEX crude was roughly $50/b, and in the early stages of a
rally that would lift the contract above $72/b by late May.

Over that period, speculative length flooded into the market, peaking in
January and early February, and remaining high ever since.

As a category, money managers remain overwhelmingly positioned in favor
of length, despite the ongoing liquidation. The ratio of longs to shorts
equaled 6.1 to one for the latest reporting period.

That said, the momentum has clearly shifted with money managers slashing
net length for seven weeks and counting.

For the week that ended June 5, money manager length fell 9,432 contracts
to 341,644 contracts, while the size of the short position rose 5,379
contracts to 55,468 contracts.

After a long stretch of barely moving, the short position has risen four
straight weeks to its most since the week that ended November 21.

There is speculation that OPEC members meeting June 22 in Vienna will
decide to relax output limits before they were set to expire at the end
of this year.

Traders might be trying to position themselves for the possibility of
lower prices in anticipation of the removal of those OPEC-led supply
cuts.

In any case, the market figures to be jittery and sensitive to headlines
as the June 22 meeting approaches.

The latest CFTC data also showed money managers reducing net length in
NYMEX product futures.

Net length in NYMEX RBOB fell 16,905 contracts to 101,377 contracts. That
was driven by length dropping 18,442 contracts to 108,132 contracts. The
short position also declined, down 1,537 contracts to 6,755 contracts.

Money manager’s net length in NYMEX ULSD decreased 12,042 contracts to
74,367 contracts. Length was down 9,269 contracts to 93,986 contracts,
while the short position grew 2,773 contracts to 19,619 contracts.

–Geoffrey Craig, geoffrey.craig@spglobal.com

–Edited by Valarie Jackson, newsdesk@spglobal.com

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